Investment Review - January 2026
- The S&P 500 was essentially flat in December, while the Dow Jones Industrials had a slight gain, and the Nasdaq Composite suffered a slight loss for the month. Notwithstanding the quiet end to 2025, the major equity indices posted double digit annual gains for the third year in a row.
- Expectations for S&P 500 earnings remain robust, and forecasts are for earnings growth to accelerate in 2026. If the current operating earnings estimate of $269 for 2025 is achieved, the result will be an increase of approximately 11% from 2024. Moreover, based on today’s estimates, operating earnings are forecast to increase by nearly 15% in 2026.
- Yields on short and intermediate U.S. Treasuries fell in 2025. The Federal Reserve is in the second year of an easing cycle, and the 2-year Treasury is the maturity most sensitive to changes by the Fed. The 2-year Treasury yield declined by 0.76%, dropping from 4.24% to 3.48%. The 10-year Treasury yield was also lower, decreasing by 0.4% as it moved from 4.57% to 4.17%. The result of shorter-term yields declining more than intermediate-term yields is the yield curve becoming more positively sloped.
Key Investment Statistics
Sources: Dow Jones Publishing, FactSet, Bloomberg, U.S. Federal Reserve of Atlanta, Yardeni Research
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